BELLEVUE SCHOOL DISTRICT 405Local Government

2023-001 The District’s internal controls were inadequate for ensuring compliance with federal Title I grant requirements for assessment system security Assistance Listing Number and Title: 84.010 Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: GT--0141 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and reside in areas with high concentrations of children from low-income families. During the 2022-2023 school year, the District spent $2,103,331 in Title I program funds. Federal regulations require recipients to establish and maintain internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. States, in consultation with school districts, must establish and maintain an assessment system that is valid, reliable and consistent with relevant professional and technical standards. States must have formal, well-documented policies and procedures to maintain test security and ensure that districts implement them for all standardized tests. The Office of Superintendent of Public Instruction (OSPI) provides templates for all districts to document their Test Security and Building Plans for each assessment they administer. OSPI also provides detailed guidance and manuals on test security. Description of Condition The District did not have adequate controls for ensuring it complied with assessment system security requirements. Specifically, the District did not have the required written Test Security and Building Plans in place for all 29 schools we reviewed that administered the following standardized tests: Washington Access to Instruction and Measurement (WA-AIM), Smarter Balanced Assessments (SBA), World-Class Instructional Design and Assessment (WIDA), and Washington Comprehensive Assessment of Science (WCAS). We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition During the 2021-2022 school year audit, District staff did not fully understand OSPI’s requirement to document written Test Security and Building Plans. Staff thought that their process of training test coordinators and communicating the testing requirements to them was sufficient to comply with the requirement. Based on when the District received the prior year finding, the District did not have time to adjust its process for the 2022-2023 school year. Effect of Condition Without documented Test Security and Building Plans, the District cannot demonstrate it implemented and complied with OSPI’s assessment system security requirements for any of the four standardized tests it administered in the 2022-2023 school year. Recommendation We recommend the District improve its internal controls and establish policies and procedures to comply with OSPI’s assessment system security requirements. Specifically, the District should establish written Test Security and Building Plans for all standardized tests it will administer. District’s Response The Bellevue School District concurs with this finding. The District did not have a written Test Security and Building Plan (OSPI TSBP) for each school. For our corrective action, the District will create a SharePoint site to retain each school’s annual OSPI TSBP for all standardized state tests starting with the 2023-2024 school year. The District Manager of Data, Testing & Research will provide instructions, professional development, and guidance for each school. Each school’s OSPI TBSP will be retained on the SharePoint site. The District Manager of Data, Testing & Research will verify that each school complies. The Bellevue School District would like to highlight that upon receiving the final audit report for 2021-2022 school year in November 2023, the corrective actions were promptly initiated, with the necessary changes implemented by January 1, 2024. Auditor’s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 34 CFR, Part 200, Title I – Improving the Academic Achievement of the Disadvantaged, Section 78 – Allocation of funds to school attendance areas and schools. Title 20 U.S. Code section 6311(b)(2)(B)(iii) requires state and local education agencies to establish and maintain valid and reliable assessment systems, consistent with relevant professional and technical standards.

2022-001 The District did not have adequate internal controls to ensure compliance with federal requirements for allowable activities and costs. Assistance Listing Number and Title: 84.425 COVID -19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425D-120182 COVID-19, 84.425D-120498 COVID-19, 84.425U-138114 COVID-19, 84.425U-140001 COVID-19, 84.425U-140600 COVID-19, 84.425U-137051 COVID-19, 84,425U-712113 Known Questioned Cost Amount: $25,903 Prior Year Audit Finding: N/A Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for, and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $8,594,626 in federal funding under its ESF awards. This included $4,451,082 in the Elementary and Secondary School Emergency Relief (ESSER I and II) Fund subprogram (84.425D), and $4,143,544 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER III) subprogram (84.425U). Federal regulations establish principles and standards for determining allowable direct and indirect costs for federal awards. The Office of Superintendent of Public Instruction (OSPI) establishes the indirect cost rate for each award, and school districts cannot exceed this approved rate when claiming reimbursement. If there are changes to the rate during a multi-year award, districts must adjust the amount claimed, if needed, to ensure they do not exceed the approved rate. Description of Condition Although the District’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and allowable costs requirements, it charged the incorrect indirect cost rate for its ESSER II award (84.425D). Cause of Condition Management and staff did not know the District needed to manually adjust its OSPI-issued unrestricted indirect cost rate for ESSER awards that covered two fiscal years. Instead, the District relied on the rate posted in the iGrants system. Effect of Condition and Questioned Costs We reviewed all indirect costs charged to the program. We found the District charged $25,903 more in indirect costs than allowable because it did not use the correct rate for its ESSER II award. We are questioning these costs. Federal regulations require the State Auditor’s Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District has not complied with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the District ensure it uses the correct OSPI-issued unrestricted indirect cost rate for the fiscal period when charging costs to federal awards. District’s Response The Bellevue School District concurs with this finding. The Budget Department’s internal procedures will be updated to include instructions for budget analysts to verify the correct indirect rate is used when preparing and reviewing grant claims. A shared document showing the historical indirect rates will continue to be updated annually and used as a reference to verify the correct rate is used in any given fiscal year. When preparing claims for reimbursement, a budget analyst will compare the indirect rate that is hard-coded in OSPI’s iGrants claim system to the calculated maximum indirect rate allowable for the fiscal year in which expenditures are incurred to ensure the correct indirect rate is used. When reviewing the claims for reimbursement, the reviewer will check the grant claim for accuracy, including verifying the indirect rate on the grant claims agrees to the calculated maximum indirect rate allowable. Auditor’s Remarks We appreciate the steps the District has taken to address the issue. We will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2022-002 The District did not have adequate controls for ensuring compliance with federal requirements for assessment system security. Assistance Listing Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 203834 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low-income families. During the 2021–22 school year, the District spent $1,943,148 in Title I program funds. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. States, in consultation with school districts, must establish and maintain an assessment system that is valid, reliable, and consistent with relevant professional and technical standards. States must have formal, well-documented policies and procedures to maintain test security and ensure that districts implement them for all standardized tests. The Office of Superintendent of Public Instruction (OSPI) provides templates for all districts to document their Test Security and Building Plans for each assessment they administer. OSPI also provides detailed guidance and manuals on test security. Description of Condition The District did not have adequate controls for ensuring it complied with assessment system security requirements. Specifically, the District did not have the required written Test Security and Building Plans in place for all the 29 schools we reviewed that administered the following standardized tests: Washington-Access to Instruction and Measurement (WA-AIM), Smarter Balanced Assessments (SBA), World-Class Instructional Design and Assessment (WIDA), and Washington Comprehensive Assessment of Science (WCAS). We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition District staff did not fully understand OSPI’s requirement to document written Test Security and Building Plans. Staff thought that their process of training test coordinators and communicating the testing requirements to them was sufficient to comply with the requirement. Effect of Condition Without documented Test Security and Building Plans, the District cannot demonstrate it implemented and complied with OSPI’s assessment system security requirements for any of the four standardized tests it administered in the 2021–22 school year. Recommendation We recommend the District improve its internal controls and establish policies and procedures to comply with OSPI’s assessment system security requirements. Specifically, the District should establish written Test Security and Building Plans for all standardized tests it will administer. District’s Response The Bellevue School District concurs with this finding. The District did not have a written Test Security and Building Plan (OSPI TSBP) for each school. For our corrective action, the District will create a SharePoint site to retain each school’s annual OSPI TSBP for all standardized state tests starting with the 2023-24 school year. The District Manager of Data, Testing & Research will provide instructions, professional development, and guidance for each school. Each school’s OSPI TBSP will be retained on the SharePoint site. The District Manager of Data, Testing & Research will verify that each school complies. Auditor’s Remarks We thank the District for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 34 CFR, Part 200, Title I – Improving the Academic Achievement of the Disadvantaged, Section 78 – Allocation of funds to school attendance areas and schools. Title 20 U.S. Code section 6311(b)(2)(B)(iii) requires state and local education agencies to establish and maintain valid and reliable assessment systems, consistent with relevant professional and technical standards.

The District did not have adequate internal controls to ensure compliance with federal suspension and debarment requirements. "See Schedule of Findings and Questioned Costs for chart/table" Background The District participates in the School Breakfast, National School Lunch Program and Summer Food Service Program for Children. These programs provide free and reduced-priced meals for low-income students. The District received $2,493,187 in federal funding to administer the programs during the 2018-19 school year. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal requirements prohibit grant recipients from contracting with parties suspended or debarred from doing business with the federal government. Whenever the District contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractor has not been suspended or debarred or otherwise excluded. This verification may be accomplished by obtaining a written certification from the contractor or inserting a clause in the contract in which the contractor states it is not suspended or debarred. Alternatively, the District may review the federal Excluded Parties List System (EPLS) issued by the U.S. General Service Administration. The District must perform one of these methods before entering into a contract. Description of Condition The District had a process in place, but it was not effective to ensure compliance with applicable suspension and debarment requirements. The District did not obtain a written certification, insert a clause into a contract or review EPLS to verify one contractor was not suspended or debarred from participating in federal programs. We consider this internal control deficiency to be a material weakness. The issue was not reported as a finding in the prior audit. Cause of Condition Although the District staff received a prompt to check for suspension and debarment as part of its business processes, the District could not provide supporting documentation to demonstrate whether it was verified for one contractor. Effect of Condition Without adequate internal controls over suspension and debarment requirements, the District cannot guarantee it pays federal funds only to eligible contractors. Any payments made to an ineligible party would be subject to recovery by the grantor. The District paid a contractor $35,537 without verifying it was not suspended or debarred. We verified the contractor had not been suspended or debarred. Therefore, we are not questioning the related costs. Recommendation We recommend the District strengthen its internal controls to ensure that it verifies suspension and debarment for all contractors that will be paid $25,000 or more in federal program funds and that it retains adequate documentation to demonstrate its compliance. District?s Response The District concurs with this finding. The District staff responsible for verifying federal suspension and debarment requirements have processes in place to check contractors for suspension and debarment immediately upon receiving an alert from the accounting system and to attach a screen shot as proof of verification within the accounting system before goods and services are paid. As a result of the omission leading to this finding, the District will include additional measures to ensure that our processes are followed and supporting documentation is retained. Auditor?s Remarks We appreciate the District?s commitment to resolve the finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, establishes requirements for management of Federal awards to non-Federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement) establishes non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.

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